Buying a home is a major life decision for most people. Whether you’re buying a home with a partner or on your own, it is a big-ticket decision that marks crossing the threshold into adulthood. For newly married couples, in particular, there are other massive expenses that occur at the same time – wedding and honeymoon cost a lot – and that can be taxing financially.
In addition to the downpayment, renovations are, more often than not, necessary when you get a home. These can start from a ballpark figure of $30,000. If you’re thinking of getting a home renovation loan, we’ve put together essential tips and questions to ask yourself before you decide on taking a renovation loan.
Budget Carefully For Renovation Expenses
A renovation loan covers works like carpentry, electrical and wiring, tiling, painting and exterior changes. Note that not all renovation loans in Singapore cover home furnishings. These can make up a significant portion of your entire renovations, so be sure to factor the costs into your total budget. It’s also easy to go over your budget. Remember to allocate additional amounts for unexpected expenditures. Most importantly, set up two columns separately to bring clarity to the needs and wants, and define what you can do away with if necessary. This is a crucial list that will also help determine the loan amount to apply for.
Engage Trusted Professionals
Renovating the home is a time-consuming and tedious project. There are many decisions to make, and steps to take throughout the renovation process. For most working adults, entrusting the project to trusted professional interior designers and providers of services and furnishings can help ease the load and stress of renovating the home.
Do The Necessary Research
If you own an HDB flat, chances are you’ll be taking an HDB loan to finance your home. For those who are taking a bank loan, note that getting a renovation from the same bank can save you some money. Several home loan providers provide a lower interest rate for the renovation loan if you are taking a home loan from them. Also, do the necessary research and ensure that you meet all the criteria. Correctly submitting all the necessary documents will ease the application process. If your application gets rejected, it can take a waiting period of up to six months before you are able to reapply.
Project How Long It Will Take You To Repay The Loan
As a general rule of thumb, the longer the loan period is, the larger the total sum will be. Renovation loans come with maximum loan tenure of five years. Know what to look for in your renovation loans and ask about the various fees that you may incur along the way. On top of the repayment amount, compare the additional fees that come with it. These can include processing fee, disbursement fee, and penalty fee if you pay the loan off early. When deciding on your loan tenure, take into account your other financial commitments, immediate and long-term plans for yourself and your family, as well as your plans for rebuilding your savings and emergency funds.